updated 10:45 am EDT, Fri October 12, 2007

Universal Anti-iTunes

Universal Music Group is attempting to form a subscription service whose primary purpose would be to unseat iTunes from its comfortable position at the top of the digital music industry, according to a claim from BusinessWeek. Called Total Music, the service would break from the traditional model of selling music by receiving direct control from labels themselves: Universal at a minimum would offer a subscription rate of $5 per month but would ask cellphone carriers and device makers to subsidize the cost themselves, effectively providing some users a free, unlimited service. Though it would initially add to up-front costs, the reduced need to buy albums would more than offset the expenses of a subscription, Universal reckons.

The emphasis would also be on recruiting major labels to wrest control away from Apple. Sony BMG has already agreed to join the Total Music venture; talks with Warner are underway, the source reported. No mention was made of fourth major label EMI, which is the only label of the four to have made a long-term commitment to digital music without copy protection and has already struck deals with many online music stores hoping to sell unguarded AAC and MP3 tracks, including iTunes.

If realized, the subscription service would represent the third initiative launched by Universal to disrupt iTunes' 70 percent or greater control of the market and secure more favorable pricing. The music label began by declining to renew its multi-year contract with Apple in favor of a month-by-month strategy that would let Universal more readily offer incentives to other companies as well as end any existing deals on shorter notice. An August announcement had the music group begin a trial selling unprotected songs through several online stores, including Amazon MP3 and Wal-Mart but excluding iTunes; this was officially described as an experimental "control" by Universal but may have actually been an attempt to push Apple out of non-DRM sales by handing a larger music library to other stores, according to one claim.

Universal chief Doug Morris is said to be particularly incensed with Apple's control and how much of it was gained through deals with himself and over-eager label heads, who were willing to make significant concessions to offer a viable alternative to music piracy. He privately observeed that the labels "got rolled like a bunch of puppies," according to an attendee at one meeting where Morris was present. The executive is specifically upset with Apple's share of each song, which amounts to 29 cents of every 99-cent track. Morris has also demanded a royalty for every Zune player as compensation for piracy and received a hostile reaction from the online community by accusing owners of iPods and other royalty-free players of being "thieves."

No clues were provided as to when Total Music be activated or which hardware and service providers might already be onboard, though the development will likely require hardware and software with support for subscription-based digital rights management, which is primarily offered through Microsoft's PlaysForSure and the partly related Zune Pass.

will fail.... again

Subscription services had been tried for many many years, none has been successful. The main thing is that people know the companies can change the price of the subscription at any time, and thus any money so far put into the subscription would vaporize if you choose not to stick with that subscription anymore. Therefore the iTunes (which can rip your retail CDs or import your mp3s) is not going down due to subscription services.

Doomed

If their primary interest is to unseat iTunes store, then they will fail. Among other things they need to make their primary interest serving the end user. That's the first easy step you'd think. The harder step that more companies get stuck on is figuring out how best to serve the end users.

Go ahead...

Numerous companies have been down this road. Has Universal done a detailed study and developed plans to succeed where the others have failed? I think they'll go off the cliff just like everyone else before them.

LOLOLLL!!

idiots

And where exactly do they think I'm going to play this music? Apple's strenght isn't iTunes. It isn't the iPod. It's the combination of the two.

I also find this quote very intersting:

"the reduced need to buy albums would more than offset the expenses of a subscription, Universal reckons."

I thought forcing users to buy whole albums or other "bundles" was what they wanted Apple to do. They hated that iTunes let you buy individual songs. Now they act they they are the hero by liberating us from having to albums? I got new for you, I'm already free from having to buy whole albums...it's called iTunes.

yeah right

Let's see...Microsoft, a company with pretty much unlimited resources, couldn't do it but Universal thinks they can?
And do they really believe that the cell providers will absorb the cost and NOT pass it on the their customers? We're talking about the companies that absolutely nickel-and-dime their customers to death.

a perfect example

of personal ego ignoring what is best for the company. Universal shareholders should be up in arms.

Imagine if you owned the rights to zillions of songs and there was a way for you to sell those songs that didn't cost you anything, but brought in revenues from a source that is growinf exponentially year by year, while your other sources of revenue are declining. It is fool-proof, it works without a hitch, and you don't have to take any risks at all. But then you choose to do it another way, where you incur all the risk, along the lines of other plans that have never succeeded.

Too much money.

The "Too much money" per sale cracks me up too. How much do they make on a disc sold to a distributor? How much do they think Apple makes on a single track after bandwidth and credit card transaction fees are subtracted?

That said, I see no reason why Apple shouldn't allow variable-pricing if that's the major sticking point. The labels will charge too much, sales will decrease, prices will adjust to compensate.

And I don't buy the simplicity argument either. I manage the varying prices in my Amazon shopping cart just fine.

Re: does it...

re: does it...

"I posted the above comment..."

Because MacNN's forumns are messed up. I think it happens if you have more than one story open in different windows/tabs. When you submit a post on one story, it gets posted to the story in the other open window (or whichever window was most recently loaded). I've started making sure I open only one at at time and haven't noticed it happening anymore to me.

iPod vs. iTunes

I happen to think the iPod PLUS iTunes makes an overall great system. I rarely use the iTunes music store as most of my music is ripped from CDs, but it is nice in a pinch to be able to buy a song for 99¢. And if I don't find the song I'm looking for on iTunes, then I see where else I can find it (sometimes for "free"). I suggest record companies add their libraries to the iTunes music store so people like me will buy them (instead of finding another way to get them).